Social Media LinkedIn is the Next Hottest Stock To Own

Britney Scott / August 29, 2013

Networking is a phenomenon that has transcended all types of boundaries business, personal, professional, national as well as international.  The power of the Internet is so strong that virtual networking has become an absolute necessity.  Prior to the advent of the Internet, only a face to face interaction was the possibility which restricted communication, particularly across countries.

Along came Facebook which started a new revolution in social networking.  Initially it started off as a social networking site for Ivy League universities and then it expanded and took on the world.  People who predicted that Facebook would make it big bought stock, which became their greatest investment ever.  However, little did people know that there is another strong competitor in the offing- LinkedIn.  LinkedIn is more focused on business and professional networking as its primary objective and socialization is only secondary to it, unlike Facebook.

LinkedIn was founded in the living room of Reid Hoffman (co-founder) in 2002 and in the years that ensued, the company meteorically grew into a premier social media organization that now has 25 billion members forming 65% of total membership outside the US.  LinkedIn has now catapulted into the number one professional and business networking site in the world.

The steep growth within LinkedIn has made it very conducive for investors’ interest in the shares as the stock price has risen 400 times from what it was in 2010 and has doubled in value in 2013.  LinkedIn, unlike Facebook’s disappointing IPO, has increased the wealth of its investors.

The reason behind this is that Facebook earns its major revenues from advertising, which increases its dependence on advertisers.  On the other hand, LinkedIn has earns its revenues out of advertisements, job listing and premium subscriptions.  This diversified revenue model ensures that the company would stay in power.  LinkedIn is also developing a program that comprises of ‘influencers’ which are 300 high profile influential users of the LinkedIn network such as Bill Gates and US President Barack Obama. The purpose behind this would be to create a publishing platform and informational hub for genuine content and for value addition for the members.  All this is done to increase the ‘stickiness’ of the site which keeps the users hooked to the site for new content.

LinkedIn has increased its revenue by 60% in the second quarter this year with a 37% enhancement in its membership base.  All this makes it a lucrative investment as the company is poised for further growth and expansion.


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